[quote=The Judge]Dude- Obviously; you can't buy B-shares in a fee-based account. So what you're saying is the broker bought B-shares, THEN convinced the client to pay an annual fee?  What a scumbag.....[/quote]

Exactly.  It was so outrageous that I actually laughed at the genius of it.....The client sees no upfront charge, broker gets a big upfront payout that has no breakpoints and a nice .25 bps plus 1.5% to boot.  Scumbag is a generous title for this maggot a*s munch.

I should also note that the broker was an independent who was billing the fee as a seperate invoice (I assume to get around some compliance issue).  It was a really odd scam he had going.

You know I see this all the time from other reps trying to bash me being fee based. If I am charging 1-1.5% and the client happens to have some A share funds in the portfolio, the other rep assumes they paid a fee. Of course the fact we bought them within the fee based account allowed us to buy the funds with no cost. (Again, assumed we cant buy another lower cost share).Then if there is a 12b-1 fee that is then refunded to the client to lower the fee.

Anyway I usually take that as a sign the rep is new and doesnt know what they are talking about...Or, well nevermind I was going to say they are at Ed Jones. But we wont get into that.

Now the fact the above rep is separate billing brings this arguement to an entire different plane. Yes they are undoubtably trying to screw the client. Of course I guess the client could have asked for separate billing on the account, I have some who do for tax reasons.

Wow this is such a long arguement I wont even go any further.

I was not aware you could buy A shares in wrap accounts. At our firm, you buy the shares at NAV.

If someone wanted advice or annual rebalancing of a GROUP of mutual funds, I can see the logic of holding them in a fee based account.

I think Babbling has the facts wrong.

I think Babbling has the facts wrong.

No, my facts are right.  And guess what... I can read a statement showing a portfolio of nothing but A share mutual funds all in the same fund family.  I met with my client yesterday.  The RIA is charging the client a quarterly fee of approximately $500 per quarter based on the account value at the end of the previous quarter.  Total charged last year was over $2000.  They evidently are doing a re-balancing act and shuffle the funds within the same fund family periodically without any consultation (discretionary) to the client to give the impression that they are earning this exorbitant fee. 

I asked if he knew if he had paid a load on these funds or not and of course he couldn't remember as this was a rollover of qualified funds from a previous employer years ago.  It is possible that he did not.  HOWEVER a 2% fee for doing nothing but re-balancing a mutual fund portfolio of the same fund family is just a tad over the top.  A fee of .5% annually would be a more reasonable amount.

As to whether he has been reimbursed the 12b-1 fees, it seems unlikely as the client reports to me that they have never seen any statement to that fact.   Of course they have been getting hosed for years without any complaint so possibly they have been reimbursed.  This is just one smaller account that they have and obviously......they haven't been paying attention.

It is all moot anyway, as we are going to ACAT this account as well as two other accounts and another qualifed rollover in in a few days.

Don't get me wrong. I think fee based accounts are a good way to go when appropriate and I am looking forward to being able to offer this service in my practice.  It is just that cases like this leave a bad taste and make us all look bad.

If someone can justify charging 2% (even with reimbursing the 12b-1 fees) on a portfolio of mutual funds all with the same fund family.....I would like to hear just why you think you are worth that.

[quote=babbling looney]

If someone can justify charging 2% (even with reimbursing the 12b-1 fees) on a portfolio of mutual funds all with the same fund family.....I would like to hear just why you think you are worth that.

[/quote]

As much as I dislike these things, and think the rate being quoted is the very top end, I don't think it's that much of a stretch to see how charging 2%, giving back, say .75 bps in 12b-1 charges and avoiding even a breakpoint reduced front load is fair.

[quote=babbling looney]

If someone can justify charging 2% (even with reimbursing the 12b-1 fees) on a portfolio of mutual funds all with the same fund family.....I would like to hear just why you think you are worth that.

[/quote]

Several reasons you'll hear if you ask that question:

1.  Because the customer doesn't understand.

2.  Because the customer is going to be screwed by somebody, so it might as well be me

3.  Because I passed the Series 7 exam and am a professional

4.  Because if it was wrong there would be laws against it, and there are not

5.  Because I have a new child and my wife quit her job

I grow weary--but you're just trying to be all moral and stuff.  You have to remember that the role of a financial advisor is to convert customer assets to fees and commissions as quickly as possible.

[quote=babbling looney]As to whether he has been reimbursed the 12b-1 fees, it seems unlikely as the client reports to me that they have never seen any statement to that fact.   Of course they have been getting hosed for years without any complaint so possibly they have been reimbursed.  This is just one smaller account that they have and obviously…they haven’t been paying attention.

It is all moot anyway, as we are going to ACAT this account as well as two other accounts and another qualifed rollover in in a few days.

Don't get me wrong. I think fee based accounts are a good way to go when appropriate and I am looking forward to being able to offer this service in my practice.  It is just that cases like this leave a bad taste and make us all look bad.

If someone can justify charging 2% (even with reimbursing the 12b-1 fees) on a portfolio of mutual funds all with the same fund family.....I would like to hear just why you think you are worth that.[/quote]

Babs, as I understand it, an advisor CANNOT receive 12b-1 fees on an advisory retirement account, at least not at my B/D, and I'm under the impression tha it is an ERISA issue...not a firm policy.  LPL has a default net of 12b-1 fees against the fee I charge, i.e., if I charge 1% and the funds have a 0.25% 12b-1 fee, the client sees a net charge of 0.75%.  If this happened in this account, the charges are probably net of the actual advisory fee, which makes it look even more expensive in my eyes.

Also, as greedy as this advisor sounds (some may argue this point, but I think it's a little pricey), I have a hard time believing that the client did not get these A shares at NAV...I cannot imagine a compliance department allowing such a double-dip, although I'll allow anything is possible...or perhaps I should say that anything WAS possible...

What does “greedy” mean in the sentence, “As greedy as the advisor sounds…?”

I simply feel that charging well in excess of 2% for managing a group of mutual funds from the same family is a bit greedy...just my opinion

[quote=Indyone]

I simply feel that charging well in excess of 2% for managing a group of mutual funds from the same family is a bit greedy...just my opinion

[/quote]

Greedy is a word that cannot be defined--do you think the guy who is charging that would consider himself greedy?

I think that calling him aggressive would be more appropriate.

Until you get to a fee of zero you always run the chance of somebody calling you greedy.

I’m sorry you people aren’t worth 2% per year. Just because YOU aren’t worth it, doesn’t mean that others aren’t worth it. I know lots of people who charge at least 2% and a friend of mine charges some people up to 2.8%.

Personally, I don't like asset-based fees. I like upfront commissions. I steal a lot of accounts from people who charge fees by telling people that the first thing I"m gonna do is turn off the broker meter. They LOVE the sound of that!

Those of you who are not in the business, but are just reading this stuff.

Sooner or later Knucklehead will lose his license.  Sociopaths such as him are relatively common in the business, but the regulators catch up with them sooner or later.

What is sad is the damage they do to the rest of us--anybody who encounters his type, or knows somebody who did gets so turned off that they won't trust anybody.

Our buddy Philo is another sociopath.  As I said there are a lot of them around--sort of like rats in the NYC subways.

[quote=NASD Newbie]

Those of you who are not in the business, but are just reading this stuff.

Sooner or later Knucklehead will lose his license.  Sociopaths such as him are relatively common in the business, but the regulators catch up with them sooner or later.

What is sad is the damage they do to the rest of us--anybody who encounters his type, or knows somebody who did gets so turned off that they won't trust anybody.

Our buddy Philo is another sociopath.  As I said there are a lot of them around--sort of like rats in the NYC subways.

[/quote]

THat was funny.

[quote=Indyone]  LPL has a default net of 12b-1 fees against the fee I charge, i.e., if I charge 1% and the funds have a 0.25% 12b-1 fee, the client sees a net charge of 0.75%.  If this happened in this account, the charges are probably net of the actual advisory fee, which makes it look even more expensive in my eyes.[/quote]

That's interesting. With our system the client would see the gross fee, and 12b-1 rebates stand as a separate issue.

[quote=knucklehead]

Personally, I don't like asset-based fees. I like upfront commissions. I steal a lot of accounts from people who charge fees by telling people that the first thing I"m gonna do is turn off the broker meter. They LOVE the sound of that!

[/quote]

No doubt that leaves them with the incorrect impression they'll no longer be paying fees.....

[quote=mikebutler222][quote=knucklehead]

Personally, I don't like asset-based fees. I like upfront commissions. I steal a lot of accounts from people who charge fees by telling people that the first thing I"m gonna do is turn off the broker meter. They LOVE the sound of that!

[/quote]

No doubt that leaves them with the incorrect impression they'll no longer be paying fees.....

[/quote]

It works like a charm.

[quote=knucklehead][quote=mikebutler222][quote=knucklehead]

Personally, I don't like asset-based fees. I like upfront commissions. I steal a lot of accounts from people who charge fees by telling people that the first thing I"m gonna do is turn off the broker meter. They LOVE the sound of that!

[/quote]

No doubt that leaves them with the incorrect impression they'll no longer be paying fees.....

[/quote]

It works like a charm.

[/quote]

And you're happy to mislead them. Make sure you have that resume ready for your next career....

[quote=NASD Newbie]

Those of you who are not in the business, but are just reading this stuff.

Sooner or later Knucklehead will lose his license.  Sociopaths such as him are relatively common in the business, but the regulators catch up with them sooner or later.

What is sad is the damage they do to the rest of us--anybody who encounters his type, or knows somebody who did gets so turned off that they won't trust anybody.

Our buddy Philo is another sociopath.  As I said there are a lot of them around--sort of like rats in the NYC subways.

[/quote]

Getting a bit paranoid, aren't we Putsy?  I thought Knucklehead and I were the same person.  No, wait...Starka and I are the same person...no, wait...Starka is one of the moderators...no, wait...everyone who shows you up for what you are is a sociopath...or a rat in the subway.

As has been pointed out before...when yo're cornered in one of your foolish statements, you naturally resort to ad hominem attacks. 

You're losing it, my boy.  Go take your meds.

[quote=Philo Kvetch][quote=NASD Newbie]

Those of you who are not in the business, but are just reading this stuff.

Sooner or later Knucklehead will lose his license.  Sociopaths such as him are relatively common in the business, but the regulators catch up with them sooner or later.

What is sad is the damage they do to the rest of us--anybody who encounters his type, or knows somebody who did gets so turned off that they won't trust anybody.

Our buddy Philo is another sociopath.  As I said there are a lot of them around--sort of like rats in the NYC subways.

[/quote]

Getting a bit paranoid, aren't we Putsy?  I thought Knucklehead and I were the same person.  No, wait...Starka and I are the same person...no, wait...Starka is one of the moderators...no, wait...everyone who shows you up for what you are is a sociopath...or a rat in the subway.

As has been pointed out before...when yo're cornered in one of your foolish statements, you naturally resort to ad hominem attacks. 

You're losing it, my boy.  Go take your meds.